As filed with the Securities and Exchange Commission on May 13, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CADENCE DESIGN SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
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77-0148231
(I.R.S. Employer Identification No.)
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2655 Seely Avenue, Building 5
San Jose, California 95134
(Address of Principal Executive Offices) (Zip Code)
Amended and Restated 1987 Stock Incentive Plan
(Full title of the plan)
James J. Cowie, Esq.
Senior Vice President, General Counsel and Secretary
Cadence Design Systems, Inc.
2655 Seely Avenue, Building 5
San Jose, California 95134
(Name and address of agent for service)
(408) 943-1234
(Telephone number, including area code, of agent for service)
Copy to:
Stewart L. McDowell, Esq.
Gibson, Dunn & Crutcher LLP
555 Mission Street, Suite 3000
San Francisco, California 94105
(415) 393-8200
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Title of securities
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Amount
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Proposed maximum
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Proposed maximum
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Amount of
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to be registered
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to be registered (1)
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offering price per share (2)
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aggregate offering price (2)
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registration fee (2)
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Common Stock, par
value $0.01 per share
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4,000,000 shares (3)
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$10.34
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$41,360,000.00
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$4,802.00
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(1)
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This Registration Statement shall also cover any additional shares of
common stock which become issuable under the Amended and Restated 1987 Stock
Incentive Plan (the Plan) by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt of
consideration which results in an increase in the number of the outstanding
shares of Cadence Design Systems, Inc. (the Registrant) common stock.
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(2)
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Calculated solely for purposes of calculating the amount of the
registration fee under Rules 457(c) and (h) of the Securities Act of 1933, as
amended. The price per share and aggregate offering price are based upon the
average of the high and low prices of common stock of the Registrant
on May 6, 2011, as reported on the NASDAQ Global Select Market.
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TABLE OF CONTENTS
NOTE
REGISTRATION OF ADDITIONAL SHARES AND INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE PURSUANT TO GENERAL INSTRUCTION E OF FORM S-8
This Registration Statement on Form S-8 is filed by Cadence Design Systems, Inc., a Delaware
corporation (the Registrant), relating to 4,000,000 shares of its common stock, par value $0.01
per share (the Common Stock), issuable to eligible employees and consultants of the Registrant
and its affiliates under the Registrants Amended and Restated 1987 Stock Incentive Plan (the
Plan). On May 17, 1990, September 30, 1991, June 4, 1992, May 31, 1994, August 7, 1998 and July
31, 2007, the Registrant filed with the Securities and Exchange Commission Registration Statements
on Form S-8 (Registration No. 33-34910, No. 33-43025, No. 33-48371, No. 33-53913, No. 333-61029 and
No. 333-144972, respectively) (together, the Prior Registration Statements) relating to shares of
Common Stock issuable to eligible employees and consultants of the Registrant and its affiliates
under the Plan. The Prior Registration Statements are currently effective. This Registration
Statement relates to securities of the same class as those to which the Prior Registration
Statements relate and is submitted in accordance with Section E of the General Instructions to Form
S-8 regarding Registration of Additional Securities.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 8. Exhibits.
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Exhibit Number
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Exhibit Description
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5.1
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Opinion and consent of Gibson, Dunn & Crutcher LLP.
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23.1
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Consent of Independent Registered Public Accounting Firm.
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23.2
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Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1).
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24.1
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Power of Attorney (included on the signature page to this
Registration Statement on Form S-8).
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99.1
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The Registrants Amended and Restated 1987 Stock Incentive Plan.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and
has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of San Jose, state of California, on this 10th day of May,
2011.
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CADENCE DESIGN SYSTEMS, INC.
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By:
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/s/ Lip-Bu Tan
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Lip-Bu Tan
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President, Chief Executive Officer and Director
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Lip-Bu Tan, Geoffrey G. Ribar and James J. Cowie, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, or their or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the date indicated.
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Signature
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Title
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Date
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/s/ Lip-Bu Tan
Lip-Bu Tan
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President, Chief Executive Officer and Director
(Principal Executive Officer)
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May 10, 2011
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/s/ Geoffrey G. Ribar
Geoffrey G. Ribar
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Senior Vice President and Chief Financial
Officer
(Principal Financial Officer and Principal
Accounting Officer)
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May 10, 2011
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/s/ Dr. John B. Shoven
Dr. John B. Shoven
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Chairman of the Board of Directors
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May 10, 2011
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/s/ Susan L. Bostrom
Susan L. Bostrom
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Director
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May 10, 2011
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/s/ Donald L. Lucas
Donald L. Lucas
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Director
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May 10, 2011
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/s/ Dr. Alberto Sangiovanni-Vincentelli
Dr. Alberto Sangiovanni-Vincentelli
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Director
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May 10, 2011
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/s/ George M. Scalise
George M. Scalise
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Director
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May 10, 2011
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/s/ Roger S. Siboni
Roger S. Siboni
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Director
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May 10, 2011
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/s/ John A.C. Swainson
John A.C. Swainson
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Director
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May 10, 2011
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EXHIBIT INDEX
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Exhibit Number
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Exhibit Description
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5.1
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Opinion and consent of Gibson, Dunn & Crutcher LLP.
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23.1
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Consent of Independent Registered Public Accounting Firm.
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23.2
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Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1).
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24.1
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Power of Attorney (included on the signature page to this
Registration Statement on Form S-8).
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99.1
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The Registrants Amended and Restated 1987 Stock Incentive Plan.
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Exhibit 99.1
CADENCE DESIGN SYSTEMS, INC.
AMENDED AND RESTATED 1987 STOCK INCENTIVE PLAN
Adopted April 24, 1987
Amended and Restated February 2, 2007 (approved by stockholders)
Amended February 2, 2007 (approved by stockholders)
Amended July 30, 2007 (stockholder approval not required)
Amended March 16, 2011 (approved by stockholders)
Termination Date: March 16, 2021
1. Purposes of the Plan.
The purposes of the Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional incentive to
the Employees and Consultants of the Company and its Affiliates, and to promote the success of the
Companys business.
2. Definitions.
As used herein, the following definitions shall apply:
(a)
Affiliate
shall mean any parent corporation or subsidiary corporation of the Company,
whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.
(b)
Board
shall mean the Committee, if one has been appointed, or the Board of Directors, if
no Committee is appointed.
(c)
Board of Directors
shall mean the Board of Directors of the Company.
(d)
Code
shall mean the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
(e)
Committee
shall mean the Committee appointed by the Board of Directors in accordance
with paragraph (a) of Section 4 of the Plan, if one is appointed.
(f)
Common Stock
shall mean the common stock of the Company.
(g)
Company
shall mean
Cadence Design Systems, Inc.
, a Delaware corporation.
(h)
Consultant
shall mean any consultant, independent contractor or adviser rendering
services to the Company or an Affiliate (provided that such person renders bona fide services not
in connection with the offering and sale of securities in capital raising transactions).
(i)
Continuous Status as an Employee or Consultant
shall mean the absence of any
interruption or termination of service, whether as an Employee or Consultant. The Board shall
determine whether Continuous Status as an Employee or Consultant shall be
considered interrupted in the case of: (i) any approved leave of absence, including sick
leave,
military leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors. Continuous Status as an Employee or Consultant shall not be deemed
to have terminated merely because of a change in the capacity in which the Participant renders
service to the Company or any Affiliate, provided that there is no interruption or termination
thereof.
(j)
Employee
shall mean any person, including officers and directors, employed by the
Company or any Affiliate. The payment of a directors fee or other compensation paid solely on
account of service as a director by the Company shall not be sufficient to constitute employment
by the Company.
(k)
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
(l)
Fair Market Value
means, with respect to any relevant date prior to January 1, 2007, the
average of the high and low prices of the Common Stock on such date, as reported on the NASDAQ
Global Select Market or such other primary national exchange on which the Common Stock is listed,
and, with respect to any relevant date on or after January 1, 2007, the closing price of the Common
Stock on such date, as reported on the NASDAQ Global Select Market or such other primary national
exchange on which the Common Stock is listed. In the event the Common Stock is not listed on an
exchange as described in the previous sentence, Fair Market Value with respect to any relevant date
shall be determined in good faith by the Board.
(m)
Incentive Stock
means shares of Common Stock granted to a Participant pursuant to
Section 10 hereof.
(n)
Incentive Stock Agreement
means a written agreement between the Company and a holder of
an award of Incentive Stock evidencing the terms and conditions of an individual Incentive Stock
grant. Each Incentive Stock Agreement shall be subject to the terms and conditions of the Plan.
(o)
Incentive Stock Option
shall mean an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(p)
Nonstatutory Stock Option
shall mean an Option not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
(q)
Option
shall mean a stock option granted pursuant to the Plan, which may be either an
Incentive Stock Option or a Nonstatutory Stock Option, at the discretion of the Board and as
reflected in the terms of the applicable Stock Option Agreement.
(r)
Optioned Stock
shall mean the Common Stock subject to an Option.
(s)
Parent
shall mean a parent corporation of the Company, whether now or hereafter
existing, as defined in Section 424(e) of the Code.
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(t)
Participant
shall mean an Employee or Consultant who receives a Stock Award.
(u)
Plan
shall mean this Amended and Restated 1987 Stock Incentive Plan, as amended from
time to time.
(v)
Qualifying Performance Criteria
shall mean any one or more of the following performance
criteria as determined pursuant to an objective formula, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business unit, segment or
Affiliate, either individually, alternatively or in any combination, and measured over a
performance period determined by the Board, on an absolute basis or relative to a pre-established
target, or compared to previous results or to a designated comparison group, in each case as
specified by the Board in a Stock Award (and in each case on a GAAP or non-GAAP basis, if
applicable): (a) cash flow (including measures of operating or free cash flow), (b) earnings per
share (diluted or basic), (c) earnings per share from continuing operations, (d) earnings
(including but not limited to earnings before interest, taxes, depreciation and amortization), (e)
return on equity, (f) total stockholder return, (g) return on capital, (h) return on assets or net
assets, (i) revenue or revenue growth, (j) income or net income, (k) operating income or net
operating income, (l) operating profit or net operating profit, (m) operating margin, (n) return on
operating revenue, (o) market share, (p) customer loyalty or satisfaction as measured by a customer
loyalty or satisfaction index determined by an independent consultant or expert in measuring such
matters, (q) return on investment, (r) stock price, (s) market capitalization, (t) cash from
operations, (u) product innovation or release schedule, (v) capital expenditure, (w) working
capital, (x) cost of capital, (y) cost reductions, (z) bookings and segments of bookings such as
net product bookings, (aa) market penetration, and (bb) technology development or proliferation.
(w)
Restricted Stock Unit
means a Stock Award granted to a Participant pursuant to Section
10 hereof pursuant to which shares of Common Stock or cash in lieu thereof may be issued in the
future.
(x)
Restricted Stock Unit Agreement
means a written agreement between the Company and a
holder of an award of Restricted Stock Units evidencing the terms and conditions of an individual
Restricted Stock Unit grant. Each Restricted Stock Unit Agreement shall be subject to the terms
and conditions of the Plan.
(y)
Rule 16b-3
shall mean Rule 16b-3 of the Exchange Act, or any successor to Rule 16b-3, as
in effect when discretion is being exercised with respect to the Plan.
(z)
Securities Act
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
(aa)
Share
shall mean a share of Common Stock, as may be adjusted in accordance with Section
12 of the Plan.
(bb)
Stock Award
shall mean any right granted under the Plan, including an Option, an award
of Incentive Stock, or a Restricted Stock Unit.
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(cc)
Stock Award Agreement
means a written agreement between the Company and a holder of a
Stock Award evidencing the terms and conditions of an individual Stock Award grant. Each Stock
Award Agreement shall be subject to the terms and conditions of the Plan.
(dd)
Stock Option Agreement
means a written agreement between the Company and a holder of an
Option award evidencing the terms and conditions of an individual Option grant. Each Stock Option
Agreement shall be subject to the terms and conditions of the Plan.
(ee)
Subsidiary
shall mean a subsidiary corporation of the Company, whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Share Reserve.
Subject to the provisions of Sections 3(b) and 12 of the Plan, the number
of shares reserved for issuance under the Plan is seventy-nine million three hundred seventy
thousand one hundred (79,370,100) shares of Common Stock; provided, however, that no more than five
million (5,000,000) shares of Common Stock authorized under the Plan may be issued pursuant to
Awards of Incentive Stock or Restricted Stock Units.
(b) Issuance of Shares.
If a Stock Award should expire, become unexercisable, be forfeited or
otherwise terminate for any reason without having been exercised in full, the then unpurchased or
forfeited Shares that were subject thereto shall, unless the Plan shall have been terminated,
become available for future grant under the Plan; provided, however, that if a Stock Award is
canceled, forfeited or treated as having been canceled for purposes of Section 162(m) of the Code,
then the canceled Stock Award shall count against the maximum number of shares for which a Stock
Award may be granted to any person under the terms of the Plan. Additionally, Shares subject to a
Stock Award under this Plan may not again be made available for issuance under this Plan if such
shares are: (i) shares used to pay the exercise price of an Option, (ii) shares delivered to or
withheld by the Company to pay the withholding taxes related to a Stock Award or (iii) shares
repurchased on the open market with the proceeds of an Option exercise.
(c) Source of Shares.
Shares issued under the Plan may be authorized, but unissued, or
reacquired Common Stock.
(d) Tax Code Limits
. The aggregate number of Shares subject to Stock Awards granted under
this Plan during any calendar year to any one Participant shall not exceed 2,216,702, which number
shall be calculated and adjusted pursuant to Section 12 only to the extent that such calculation or
adjustment will not affect the status of any Stock Award intended to qualify as performance-based
compensation under Section 162(m) of the Code. The aggregate number of Shares that may be issued
pursuant to the exercise of Incentive Stock
Options granted under this Plan shall not exceed 79,370,100, which number shall be calculated
and adjusted pursuant to Section 12 only to the extent that such calculation or adjustment will not
affect the status of any option intended to qualify as an Incentive Stock Option under Section 422
of the Code.
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4. Administration of the Plan.
(a) Procedure.
The Plan shall be administered by the Board of Directors. The Board of
Directors may appoint a Committee consisting of one or more members of the Board of Directors, to
administer the Plan on behalf of the Board of Directors, subject to such terms and conditions as
the Board of Directors may prescribe. In such event, any references in the Plan to the Board of
Directors shall be deemed to refer to the Committee. To the extent required to satisfy the
requirements of Rule 16b-3 or Section 162(m) of the Code, the Committee shall consist of two or
more Non-Employee Directors (i.e., a director who is receiving no compensation from the Company
other than for service on the Board of Directors or who does not receive such additional
compensation which exceeds the limits specified in the definition of such term under Rule 16b-3 and
otherwise meets the requirement under Rule 16b-3 for non-employee directors) or Outside
Directors (i.e., a director who is not either a current or former officer of the Company nor a
current employee of the Company, and who is receiving no compensation from the Company other than
for service on the Board of Directors or who does not receive such additional compensation which
exceeds the limits specified in the definition of such term under Section 162(m) of the Code).
Once appointed, the Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase or decrease the size of the
Committee and appoint additional members thereof, remove members (with or without cause), and
appoint new members in substitution therefor, fill vacancies however caused and remove all members
of the Committee, and thereafter directly administer the Plan. Notwithstanding anything in this
Section 4 to the contrary, at any time the Board of Directors or the Committee may delegate to a
committee of one or more members of the Board of Directors the authority to grant Stock Awards to
all Employees and Consultants or any portion or class thereof. Members of the Board of Directors
who are either eligible for Stock Awards or have been granted Stock Awards may vote on any matters
affecting the administration of the Plan or grant of any Stock Awards pursuant to the Plan, except
that no such member shall act upon the granting of a Stock Award to himself, but any such member
may be counted in determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting of Stock Awards to him or her.
(b) Powers of the Board.
Subject to the provisions of the Plan, the Board shall have the
authority, in its discretion: (i) to grant Stock Awards under the Plan; (ii) to determine the
exercise or sales price per share of Stock Awards to be granted, which exercise price shall be
determined in accordance with Sections 8(a) and 10(c) of the Plan, as applicable; (iii) to
determine the Employees or Consultants to whom, and the time or times at which, Stock Awards shall
be granted, the number of Shares to be represented by each Stock Award, and the terms of such Stock
Awards; (iv) to interpret the Plan; (v) to prescribe, amend and rescind rules and regulations
relating to the Plan; (vi) to determine the terms and provisions of each Stock Award granted (which
need not be identical) in accordance with the Plan, and, with the consent of the holder thereof
with respect to any adverse change, modify or amend each Stock Award;
(vii) to accelerate or defer (the latter with the consent of the Participant) the exercise
date and vesting of any Stock Award; (viii) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of a Stock Award previously granted by the
Board; and (ix) to make all other determinations deemed necessary or advisable for the
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administration of the Plan. The Board, in the exercise of this power, may correct any defect,
omission or inconsistency in the Plan or in any Stock Award Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(c) Effect of Boards Decision.
All decisions, determinations and interpretations of the
Board shall be final and binding on all Participants and any other holders of any Stock Awards
granted under the Plan.
5. Eligibility.
Stock Awards may be granted only to Employees or Consultants. An Employee or
Consultant who has been granted a Stock Award may, if he or she is otherwise eligible, be granted
an additional Stock Award.
Incentive Stock Options may only be granted to Employees. The aggregate Fair Market Value
(determined at the time the Option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by such individual during any calendar year (under the
Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of
the Company) shall not exceed $100,000. To the extent that the grant of an Option exceeds this
limit, the portion of the Option that exceeds such limit shall be treated as a Nonstatutory Stock
Option.
The Plan shall not confer upon any Participant any right with respect to continuation of
employment or consultancy by the Company or any Affiliate, as applicable, nor shall it interfere in
any way with the Participants right or the Companys or any Affiliates right to terminate the
Participants employment at any time or the Participants consultancy pursuant to the terms of the
Consultants agreement with the Company or any Affiliate.
6. Term of the Plan.
The Plan became effective upon its adoption by the Board of Directors.
Subsequently amended, the Plan shall continue in effect until March 16, 2021 unless sooner
terminated under Section 14 hereof.
7. Term of Option; Vesting Provisions.
(a) Option Term.
The term of each Option shall be seven (7) years from the date of grant
thereof or such shorter term as may be provided in the applicable Stock Option Agreement. However,
in the case of an Incentive Stock Option granted to an Employee, who immediately before the
Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter time
as may be provided in the applicable Stock Option Agreement.
(b) Vesting Provisions.
The terms on which each Option shall vest shall be determined by the
Board in its discretion, and shall be set forth in the Stock Option Agreement
relating to each such Option. Without limiting the discretion of the Board, vesting
provisions may include time-based vesting or vesting based on achievement of performance or other
criteria. Performance criteria may, but need not, be based on Qualifying Performance Criteria.
The provisions of this Section 7(b) are subject to any Option provisions governing the minimum
number of Shares as to which an Option may be exercised.
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8. Option Exercise Price and Consideration.
(a) Exercise Price.
The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but shall be subject to
the following:
(i)
In the case of an Incentive Stock Option:
(1)
Granted to an Employee who, immediately before the grant of such Incentive Stock Option,
owns stock representing more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(2)
Granted to any Employee to whom Section 8(a)(i)(1) hereof is not applicable, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii)
In the case of an Option granted on or after the effective date of registration of any
class of equity security of the Company pursuant to Section 12 of the Exchange Act and prior to six
months after the termination of such registration, the per Share exercise price shall be not less
than 100% of the Fair Market Value per Share on the date of grant.
(iii)
Notwithstanding the provisions of this Section 8(a), an Option (whether an Incentive
Stock Option or Nonstatutory Stock Option) may be granted with an exercise price lower than set
forth in this Section 8(a) if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the Code.
(b) Consideration.
Subject to applicable law, the consideration to be paid for the Shares to
be issued upon exercise of an Option, including the method of payment, shall be determined by the
Board and may consist entirely of cash, check, shares of Common Stock having a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, or any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Shares as may be determined by the Board. In making its
determination as to the type of consideration to accept, the Board shall consider if acceptance of
such consideration may be reasonably expected to benefit the Company.
(c) No Repricing without Stockholder Approval.
Other than in connection with a change in the
Companys capitalization (as described in Section 12), the Company shall
not, without stockholder approval, (i) reduce the exercise price of such Option, (ii) exchange
such Option for cash, another Stock Award or a new Option with a lower exercise price or (iii)
otherwise reprice such Option.
9. Exercise of Options.
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(a) Procedure for Exercise; Rights as a Stockholder
. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Board, including
performance criteria with respect to the Company and/or the Participant, and as shall be
permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company in accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan. Until the issuance
(as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
(b) Termination of Status as an Employee or Consultant.
If a Participant ceases to serve as
an Employee or Consultant for any reason other than death, the Participant may, but only within
such period of time ending on the earlier of (i) three (3) months (or such other period of time as
is determined by the Board) after the date the Participant ceases to be an Employee or Consultant
or (ii) the expiration of the term of the Option, exercise the Option to the extent that the
Participant was entitled to exercise it at the date of such termination. To the extent that the
Participant was not entitled to exercise the Option at the date of such termination, or if the
Participant does not exercise such Option (which the Participant was entitled to exercise) within
the time specified herein, the Option shall terminate.
(c) Death of Participant.
In the event of the death of a Participant:
(i)
during the term of the Option who is at the time of the Participants death an Employee or
Consultant and who shall have been in Continuous Status as an Employee or Consultant since the date
of grant of the Option, the Option may be exercised at any time during the period ending on the
earlier of the date that is three (3) months (or such longer period of time as determined by the
Board) following the date of death or the date the Option would
otherwise terminate, by the Participants estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the right to exercise that
would have accrued had the Participant continued living three (3) months (or such longer period of
time as determined by the Board) after the date of death. Any and all Options that are not
exercised during such period shall terminate as of the end of such period; or
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(ii)
within one (1) month (or such longer period of time as determined by the Board) after the
termination of Continuous Status as an Employee or Consultant, the Option may be exercised, at any
time during the period ending on the earlier of the date that is three (3) months (or such longer
period of time as determined by the Board) following the date of death or the date the Option would
otherwise terminate, by the Participants estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to exercise that had
accrued at the date of termination. Any and all of the deceased Participants Options that are not
exercised during such period shall terminate as of the end of such period.
10. Incentive Stock and Restricted Stock Units.
(a) General.
Incentive Stock is an award or issuance of shares of Common Stock under the
Plan, the grant, issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued service or performance
conditions) and terms as the Board deems appropriate. Restricted Stock Units are awards
denominated in units of Shares under which the issuance of Shares is subject to such conditions
(including continued employment or performance criteria) and terms as the Board deems appropriate.
Unless determined otherwise by the Board, each Restricted Stock Unit will be equal to one Share and
will entitle a Participant to either the issuance of Shares or payment of an amount of cash
determined with reference to the value of Shares. The Board may specify that the grant, vesting or
retention of any or all Incentive Stock and/or Restricted Stock Units is intended to satisfy the
requirements for performance-based compensation under Section 162(m) of the Code. To the extent
that any Incentive Stock and/or Restricted Stock Unit Award is designated by the Board as
performance-based compensation under Section 162(m) of the Code, (i) the performance criteria for
the grant, vesting or retention of any such Incentive Stock and/or Restricted Stock Unit Award
shall be a measure based on one or more Qualifying Performance Criteria selected by the Board,
specified at the time the Incentive Stock and/or Restricted Stock Unit Award is granted, and shall
be a preestablished goal under Treasury Regulation Section 1.162-27(e)(2)(i), (ii) the Board shall
certify the extent to which any Qualifying Performance Criteria has been satisfied, and the amount
payable as a result thereof, prior to payment of any Incentive Stock and/or Restricted Stock Unit
Award that is intended to satisfy the requirements for performance-based compensation under
Section 162(m) of the Code, and (iii) the award shall comply with all other applicable requirements
relating to performance based compensation under Section 162(m) of the Code. To the extent a
performance-based award is not intended to satisfy the requirements for performance-based
compensation under Section 162(m) of the Code, the performance criteria for the grant, vesting or
retention of any such Incentive Stock and/or Restricted Stock Unit Award may be a measure based on
one or more Qualifying Performance Criteria selected by the Board, or any other criteria deemed
appropriate by the Board.
(b) Incentive Stock Agreement; Restricted Stock Unit Agreement.
Each Incentive Stock
Agreement and Restricted Stock Unit Agreement shall contain provisions regarding (i) the number of
shares of Common Stock subject to such award or a formula for determining such number, (ii) the
purchase price of the Shares, if any, and the means of payment for the Shares, (iii) the
performance criteria, if any, and level of achievement of these criteria
9
that shall determine the
number of Shares granted, issued, retainable and/or vested, (iv) such terms and conditions on the
grant, issuance, vesting and/or forfeiture of the Shares as may be determined from time to time by
the Board, (v) restrictions on the transferability of the Shares and (vi) such further terms and
conditions in each case not inconsistent with the Plan as may be determined from time to time by
the Board. Shares of Incentive Stock may be issued in the name of the Participant and held by the
Participant or held by the Company, in each case as the Board may provide.
(c) Sales Price.
Subject to the requirements of applicable law, the Board shall determine the
price, if any, at which shares of Incentive Stock or Shares underlying Restricted Stock Units shall
be sold or awarded to a Participant, which price may vary from time to time and among Participants
and which may be above or below the Fair Market Value of such shares at the date of grant or
issuance.
(d) Share Vesting.
Except as set forth herein, the grant, issuance, retention and/or vesting
of shares of Incentive Stock and Restricted Stock Units, as applicable, shall be at such time and
in such installments as determined by the Board. The Board shall have the right to make the timing
of the grant and/or the issuance, ability to retain and/or vesting of shares of Incentive Stock and
Restricted Stock Units subject to continued service, passage of time and/or such performance
criteria as deemed appropriate by the Board; provided that, in no event shall an award of Incentive
Stock or Restricted Stock Units vest sooner than (i) three (3) years after the date of grant, if
the vesting of the Incentive Stock or Restricted Stock Units is based solely on Continuous Status
as an Employee or Consultant and the grant of Incentive Stock or Restricted Stock Units is not a
form of payment of earned incentive compensation or other performance-based compensation, provided,
however, that notwithstanding the foregoing vesting limitations, shares of Incentive Stock and
awards of Restricted Stock Units vesting under this clause (i) may vest in installments so long as
the vesting schedule, at any point in time, is not more favorable than what would be vested under a
monthly pro rata installment schedule (i.e., 1/36 per month for 3 years), or (ii) one (1) year
after the date of grant, if the vesting of Incentive Stock or Restricted Stock Units is subject to
the achievement of performance goals. Notwithstanding the foregoing, the Board may accelerate
vesting (in a Stock Award Agreement or otherwise) of any Stock Award in the event of a
Participants termination of service as an Employee or Consultant, a Change in Control or similar
event, provided that, in the case of award of Incentive Stock or Restricted Stock Units that is
intended to qualify as performance based compensation under Section 162(m), such acceleration
shall comply with the requirements set forth in Treasury Regulation Section 1.162-27(e)(2)(iii).
(e) Transferability.
Shares of Incentive Stock and Restricted Stock Units shall be
transferable by the Participant only upon such terms and conditions as are set forth in the
applicable Stock Award Agreement, as the Board shall determine in its discretion, so long as the
Incentive Stock or Restricted Stock Units, as applicable, awarded under the Stock Award
Agreement remain subject to the terms of the Stock Award Agreement.
(f) Discretionary Adjustments.
Notwithstanding satisfaction of any performance goals, the
number of shares granted, issued, retainable and/or vested under an award of Incentive Stock or
Restricted Stock Units, as applicable, on account of either financial
10
performance or personal
performance evaluations may be reduced by the Board on the basis of such further considerations as
the Board shall determine, but may not be increased. In addition, the Board may appropriately
adjust any evaluation of performance under the Qualifying Performance Criteria to exclude any of
the following events that occurs during a performance period: (i) asset write-downs, (ii)
litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in managements discussion and
analysis of financial condition and results of operations appearing in the Companys annual report
to stockholders for the applicable year.
(g) Voting Rights.
Unless otherwise determined by the Board, Participants holding shares of
Incentive Stock granted hereunder may exercise full voting rights with respect to those shares
during the period of restriction. With respect to Shares underlying Restricted Stock Units,
Participants shall have no voting rights unless and until such Shares are reflected as issued and
outstanding shares on the Companys stock ledger.
(h) Dividends and Distributions.
Participants in whose name an Award of Incentive Stock is
granted shall be entitled to receive all dividends and other distributions paid with respect to the
Shares underlying such Award, unless determined otherwise by the Board. Participants in whose name
an Award of Restricted Stock Units is granted shall not be entitled to receive dividends or other
distributions paid with respect to the Shares underlying such Award, unless determined otherwise by
the Board. The Board will determine whether any such dividends or distributions will be
automatically reinvested in additional Shares or will be payable in cash; provided that such
additional Shares and/or cash shall be subject to the same restrictions and vesting conditions as
the Award with respect to which they were distributed. Notwithstanding anything herein to the
contrary, in no event shall dividends or dividend equivalents be currently payable with respect to
unvested or unearned Awards subject to performance criteria.
11. Non-Transferability of Stock Awards.
Except as otherwise expressly provided in the terms
of the applicable Stock Award Agreement, a Stock Award may not be sold, pledged, assigned,
hypothecated, transferred or otherwise disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the Participant, only by
the Participant or the Participants legal representative. Notwithstanding the foregoing, the
Participant may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Participant, shall
thereafter be entitled to exercise the Stock Award.
12. Adjustments upon Changes in Capitalization or Change in Control.
The number of Shares
covered by each outstanding Stock Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Stock Awards have yet been granted or which have been
returned to the Plan upon cancellation, expiration, forfeiture or other termination of a Stock
Award, as well as the price per Share covered by each such outstanding Stock Award, shall be
equitably adjusted for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split or the payment of a stock dividend with
11
respect to the Common Stock or
any other increase or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been effected without receipt of
consideration. Such adjustments shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to a Stock Award. Such adjustment shall be designed to
comply with Section 409A and 424 of the Code or, except as otherwise expressly provided in Section
3(d) of this Plan, may be designed to treat the Shares available under the Plan and subject to
Awards as if they were all outstanding on the record date for such event or transaction or to
increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount
distributed to the Companys securityholders.
For purposes of the Plan, a Change in Control shall be deemed to occur upon the consummation
of any one of the following events: (a) a sale of all or substantially all of the assets of the
Company; (b) a merger or consolidation in which the Company is not the surviving corporation (other
than a transaction the principal purpose of which is to change the state of the Companys
incorporation or a transaction in which the voting securities of the Company are exchanged for
beneficial ownership of at least 50% of the voting securities of the controlling acquiring
corporation); (c) a merger or consolidation in which the Company is the surviving corporation and
less than 50% of the voting securities of the Company that are outstanding immediately after the
consummation of such transaction are beneficially owned, directly or indirectly, by the persons who
owned such voting securities immediately prior to such transaction; (d) any transaction or series
of related transactions after which any person (as such term is defined in Section 13(d)(3) of the
Exchange Act), other than any employee benefit plan (or related trust) sponsored or maintained by
the Company or any subsidiary of the Company, becomes the beneficial owner of voting securities of
the Company representing 40% or more of the combined voting power of all of the voting securities
of the Company; (e) during any period of two consecutive years, individuals who at the beginning of
such period constitute the membership of the Companys Board of Directors (Incumbent Directors)
cease for any reason to have authority to cast at least a majority of the votes which all directors
on the Board of Directors are entitled to cast, unless the election, or the nomination for election
by the Companys stockholders, of a new director was approved by a vote of at least two-thirds of
the votes entitled to be cast by the Incumbent Directors, in which case such director shall also be
treated as an Incumbent Director in the future; or (f) the liquidation or dissolution of the
Company.
In the event of a Change in Control, then: (a) any surviving or acquiring corporation shall
assume Stock Awards outstanding under the Plan or shall substitute similar awards (including an
option to acquire the same consideration paid to stockholders in the transaction described in this
Section 12 for those outstanding Options under the Plan), or (b) in the event any surviving or
acquiring corporation refuses to assume such Stock Awards or to substitute similar awards for those
outstanding under the Plan, (i) with respect to Stock Awards held by persons then performing
services as Employees or Consultants, the vesting of such Stock Awards and the time during which
such Stock Awards may be exercised shall be accelerated prior to such event and
12
the Stock Awards
terminated if not exercised after such acceleration and at or prior to such event, and (ii) with
respect to any other Options outstanding under the Plan, such Options shall be terminated if not
exercised prior to such event.
13. Miscellaneous.
(a) Acceleration of Exercisability and Vesting.
The Board shall have the power to accelerate
the time at which a Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest in accordance with the Plan, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during which it will vest.
If the Board, at its sole discretion, permits acceleration as to all or any part of a Stock Award,
the aggregate Fair Market Value (determined at the time Stock Award is granted) of stock with
respect to which Incentive Stock Options first become exercisable in the year of such dissolution,
liquidation, sale of assets or merger cannot exceed $100,000. Any remaining accelerated Incentive
Stock Options shall be treated as Nonstatutory Stock Options.
(b) Additional Restrictions on Stock Awards.
Either at the time a Stock Award is granted or
by subsequent action, the Board may, but need not, impose such restrictions, conditions or
limitations as it determines appropriate as to the timing and manner of any resales by a
Participant or other subsequent transfers by an Participant of any Shares issued under a Stock
Award, including without limitation (i) restrictions under an insider trading policy, (ii)
restrictions designed to delay and/or coordinate the timing and manner of sales by Participants,
and (iii) restrictions as to the use of a specified brokerage firm for such resales or other
transfers.
(c) Stockholder Rights.
No Participant shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares of Common Stock subject to a Stock Award unless
and until such Participant has satisfied all requirements for exercise and/or vesting of the Stock
Award pursuant to its terms and said Shares have been issued to the Participant.
(d) Investment Assurances.
The Company may require a Participant, as a condition to
exercising or acquiring Common Stock under any Stock Award, (i) to give written assurances
satisfactory to the Company as to the Participants knowledge and experience in financial and
business matters and/or to employ a purchaser representative reasonably satisfactory to the Company
who is knowledgeable and experienced in financial and business matters and that he or she is
capable of evaluating, alone or together with the purchaser representative, the merits and risks of
the Stock Award; and (ii) to give written assurances satisfactory to the Company stating that the
Participant is acquiring Common Stock subject to the
Stock Award for the Participants own account and not with any present intention of selling or
otherwise distributing the Common Stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (1) the issuance of the shares of Common
Stock upon exercise of the Option or acquisition of Common Stock under the Plan has been registered
under a then currently effective registration statement under the Securities Act or (2) as to any
particular requirement, a determination is made by counsel for the Company that such requirement
need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
13
issued under the Plan as
such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Stock represented
thereby.
(e) Withholding Obligations.
To the extent provided by the terms of a Stock Award Agreement,
the Participant may satisfy any federal, state or local tax withholding obligation relating to a
Stock Award by any of the following means (in addition to the Companys right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such means: (i)
tendering a cash payment; (ii) authorizing the Company to withhold shares of Common Stock from the
shares of Common Stock otherwise issuable to the Participant as a result of the Stock Award,
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum
amount of tax required to be withheld by law; or (iii) delivering to the Company owned and
unencumbered shares of Common Stock.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination.
The Board may at any time terminate the Plan or amend the Plan
from time to time in such respects as the Board may deem advisable; provided, however, that no
amendment shall be effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary for the Plan to satisfy the requirements of Section 422 of the
Code, Rule 16b-3 or any listing requirements of any securities exchange or national market system
on which the Common Stock is traded.
(b) Effect of Amendment or Termination.
Any such amendment or termination of the Plan shall
not adversely affect Stock Awards already granted and such Stock Awards shall remain in full force
and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise
between the Participant and the Board, which agreement must be in writing and signed by the
Participant and the Company.
15. Conditions Upon Issuance of Shares.
Shares shall not be issued pursuant to a Stock Award
unless the exercise of the Option, if applicable, and the issuance and delivery of such Shares
pursuant the Stock Award shall comply with all relevant provisions of the law, including without
limitation, the Securities Act, the Exchange Act and the requirements of any stock exchange or
national market system upon which the Shares may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.
16. Liability of Company
. The Company and any Affiliate which is in existence or hereafter
comes into existence shall not be liable to a Participant or other persons as to:
(a)
The non-issuance or sale of Shares as to which the Company has been unable to obtain from
any regulatory body having jurisdiction the authority deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares hereunder; or
(b)
Any tax consequence expected, but not realized, by any Participant or other person due to
the receipt, exercise or settlement of any Stock Award granted hereunder.
14
17. Reservation of Shares.
The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements
of the Plan. The Companys inability to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Companys counsel to be necessary for the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
18. Stock Award Agreement.
All Stock Awards shall be evidenced by written award agreements in
such form as the Board shall approve.
19. Choice of Law.
The law of the State of Delaware, without regard to its conflict of laws
rules, shall govern all questions concerning the construction, validity and interpretation of the
Plan.
20. Section 409A
. It is intended that any Options and Incentive Stock issued pursuant to this
Plan and any award agreement shall not constitute deferrals of compensation within the meaning of
Section 409A of the Code and, as a result, shall not be subject to the requirements of Section 409A
of the Code. It is further intended that any Restricted Stock Units issued pursuant to this Plan
and any award agreement or other written document establishing the terms and conditions of the
Stock Award (which may or may not constitute deferrals of compensation, depending on the terms of
each Stock Award) shall avoid any plan failures within the meaning of Section 409A(a)(1) of the
Code. The Plan and each award agreement or other written document establishing the terms and
conditions of a Stock Award are to be interpreted and administered in a manner consistent with
these intentions. However, no guarantee or commitment is made that the Plan, any award agreement
or any other written document establishing the terms and conditions of a Stock Award shall be
administered in accordance with the requirements of Section 409A of the Code, with respect to
amounts that are subject to such requirements, or that the Plan, any award agreement or any other
written document establishing the terms and conditions of a Stock Award shall be administered in a
manner that avoids the application of Section 409A of the Code, with respect to amounts that are
not subject to such requirements.
21. Required Delay in Payment on Account of a Separation from Service
. Notwithstanding any
other provision in this Plan, any award agreement or any other written document establishing the
terms and conditions of a Stock Award, if any stock Award recipient is a specified employee (as
defined in Treasury Regulations Section 1.409A-1(i)), as of the date of his or her Separation from
Service (as defined in authoritative IRS guidance under Section 409A of the Code), then, to the
extent required by Treasury Regulations Section 1.409A-
3(i)(2), any payment made to the Stock Award recipient on account of his or her Separation
from Service shall not be made before a date that is six months after the date of his or her
Separation from Service. The Board may elect any of the methods of applying this rule that are
permitted under Treasury Regulations Section 1.409A-3(i)(2)(ii).
15